It is anticipated that treatments under HMSA's commercial evaluation will commence before the end of Hythiam's second fiscal quarter ending June 30, 2007. Up to 50 patients will receive the PROMETA protocols for alcoholism, stimulants, and alcoholism and stimulants. Outcomes will be measured at 90 days, after which initial reimbursement may commence, with additional follow-up extending through 6 and 12 months. Endpoints that will be evaluated in the pilot include the ability to rapidly transition individuals back to their families and employers by converting their care to an out-patient treatment modality as soon as feasible.

"There is no question that we need to look for and support innovative solutions for substance dependence," said Dr. Richard S. Chung, MD, Senior Vice President, Health Services Division, HMSA. "The promise of an approach that combines targeted, acute outpatient medical intervention with counseling is extremely appealing to us. In addition to reviewing the public PROMETA clinical outcomes in various populations, we have also met with and had extensive discussions about PROMETA with clinicians and patients alike. We look forward to learning more about the utility of PROMETA in the populations we serve."

"We are excited to add HMSA to the growing list of entities that are evaluating PROMETA for use in their populations," said Terren Peizer, Chairman and CEO of Hythiam. "We believe that if pending pilot results from this and the previously announced pilots mirror the successful outcomes that PROMETA has demonstrated across every other completed study and pilot thus far, we will be in a position to begin realizing initial revenues from PROMETA based disease management products for commercial managed care third-party payers before year-end. Despite this belief, we have not incorporated any revenues from this segment of our business into our current fiscal guidance for 2007. Of note, we anticipate that the pilot will commence shortly, since we have already collaborated with HMSA to identify a treatment provider, a step that has taken a longer time in the past evaluations we have entered into.

Peizer continued, "As we have articulated in the past our initial expected patient penetration rate on managed care plans is for the most severe cases, or .2% of all lives. For a plan the size of HMSA that could represent annual revenues to Hythiam of up to $14 million, and multiples of that in potential long-term potential savings for them. As we demonstrate value, we expect to expand beyond these 'high-utilizers,' and address the broad spectrum of alcohol and substance dependent lives under care. It is also our expectation that we will be in a position to expand our disease management fee based upon demonstrated medical savings. Most importantly for HMSA and the treatment providers will be the fact that adoption and reimbursement will naturally follow the demonstration of benefit to the patient. At this stage we are in discussions with 18 other commercial third-party payer opportunities including managed care and self-funded employers. In all instances, the value proposition is compelling to our partners since we will work with them towards improving the quality of care for the patient while lowering the medical costs and treatment intensity required by this chronically, relapsing population.

"While we are pleased at the initial progress that has been made to date, we anticipate a dramatic acceleration across all of our business segments once controlled study data is made available later this year. Expanded managed care and government adoption, while initially predicated on commercial evaluations and pilots, will change dramatically based upon the availability of data and initial adoption and reimbursement from the entities currently conducting evaluations."

About Hawaii Medical Service Association

HMSA is a nonprofit, mutual benefit association founded in Hawaii in 1938. It is governed by a community board of directors that serves without compensation and includes representatives from health care, business, labor, government, education, clergy, and the community at large. HMSA is an independent licensee of the Blue Cross and Blue Shield Association. Nationally, HMSA and 37 other Blue Cross and Blue Shield plans provide worldwide coverage to more than 94 million members.

About PROMETA®

Hythiam's PROMETA® treatment protocols are designed for use by healthcare providers seeking to treat individuals diagnosed with dependencies to alcohol, cocaine or methamphetamine, as well as combinations of these drugs. The PROMETA treatment protocols comprise nutritional supplements, FDA-approved oral and IV medications used off-label and separately administered in a unique dosing algorithm, as well as psychosocial or other recovery-oriented therapy chosen by the patient and his or her treatment provider. As a result, PROMETA represents an innovative approach to managing alcohol, cocaine, or methamphetamine dependence that is designed to address physiological, nutritional, and psychosocial aspects of the disease, and is thereby intended to offer patients an opportunity to achieve sustained recovery. To learn more, please visit www.prometainfo.com.

About Hythiam, Inc.